Outside Investment Projects in Papua

While Papua has not suffered nearly as much as Sumatra or Kalimantan from the resource exploitation industries such as mining, logging or plantations, a steady stream of project proposals has emerged and new plans seem to be coming up at an ever-increasing pace.

The largest foreign investment project in Papua is Freeport McMoRan’s Grasberg mine, the world’s largest gold mine and third largest copper mine. Freeport and Indonesia both entered West Papua more or less simultaneously in the 1960s, in the midst of the Cold War as Western powers chose to back the new Suharto regime. Henry Kissinger, who was in Jakarta at the time of the Act of Free Choice and counselled US President Nixon not to get involved,(13) remains on the board of directors of Freeport to this day.

Freeport pays more in taxes to the Indonesian government than any other single investment project, and because of that is resented by many Papuans as it ties Papua more strongly to Indonesia. The mine is also a source of income for the military and police, who gain directly through being paid by the mining company (which the company has admitted to in 2003 and 2011(14)), and also through protection rackets around the gold panning that has arisen around the tailings the company dumps in the Aikwa river. There are regular mysterious ambushes along the road that follows this river, and many Papuans allege that state security forces may be involved.

Apart from a major natural gas project near Bintuni run by BP, most other investments in West Papua have been on a smaller scale. Logging and plantations have been nowhere near the scale that they have been in Kalimantan. Nevertheless, around one quarter of Papua’s forest is estimated to have been lost since the 1990s, mostly connected to illegal logging of valuable merbau logs.(15) A few oil-palm plantations have been set up in the areas around Manokwari and Jayapura, as well as Merauke, by companies such as Sinar Mas, Korindo and state-owned PTPN II. One reason for the limited penetration is that operating costs can be higher in Papua for relatively small-scale plantations as there is little supporting infrastructure.

Nevertheless, over the past two decades, there have been a series of large-scale plans for plantation development in Papua. Twenty years ago, US company Scott Paper was planning to establish eucalyptus plantations over 790,000 ha in Merauke, to feed a pulp mill. That company, along with their partner Astra, eventually pulled out of the project. A successor company, Texmaco, incurred huge debts in the 1997-98 Asian Financial Crisis and so abandoned its plans. In the mid 1990s a huge agro-industrial plan was announced in the Mamboramo area, which invited investment from several European countries. Most recently, in 2007, Sinar Mas developed plans for up to one million hectares of oil palm plantation, mostly in Merauke and surrounding regions, in partnership with the Chinese National Offshore Oil Company (CNOOC).(16) Although none of these plans have come to fruition, they all share the characteristics of mega-projects conceived outside of Papua, focussed on the exploitation of the land which is seen as a resource to be used for profit. They have all shown little regard for the welfare of local people, their sovereignty over their ancestral domain, nor has there been any concept of designing development in a way that could benefit people – just pure and simple land grabs.

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